Abstract

it is understood that Mexican migrants working in the United States pay taxes in the local Mexican economy via the purchases made with family remittances, but specialized studies on migration and development have largely ignored the contribution of remittances to the country's public coffers. Based on the hypothesis that a significant part of the contribution to public revenues comes from indirect taxes, this section estimates remittances’ contribution to Mexican public income by quantifying how much VAT income was collected as a result of remittances that were sent from the United States. We aim to respond to the following questions: How much Value Added Tax was collected from purchases made with remittance money and how has this contribution changed between 2006 and 2008? How important is this contribution when compared with other sources of public revenue such as petroleum exports or income tax? What is fiscal charge of Mexican households that receive remittances when compared with those that do not? Do poor families that receive remittances pay more in taxes than poor families that do not receive remittances? Is public spending received by households with remittances socially fair?